Employment growth data shows signs of a slowing economy

Jul 21, 2022
| Posted in
Economy & Housing
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Employment has largely remained flat since Dec 2021. Seasonally adjusted employment decreased in May 2022 by 500 jobs, largely offsetting the gains from March to April.

The Kansas City economy has now recovered 81% of the 139,300 jobs lost from the COVID-19 downturn. Kansas City needs to recover another 26,300 jobs to return to the pre-pandemic high in January 2020. The unemployment rate declined to 3.1%, down from 3.3% in April, indicating that the labor market remains exceptionally tight despite the low job growth.

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Peer metro comparison

Kansas City’s rank on the 12-month employment growth rate remained steady this month at 10th out of 11. However, the level of its 12-month employment growth rate fell in May to 1.5%, down from 1.7% in April. Overall, Kansas City has recovered more slowly than nearly all of our peer benchmark metros, with a growth rate that is less than one-quarter that of the market leaders, Nashville and Austin.

Specific industries performance

Industries that saw growth during the past 12-month period:

  • Leisure and Hospitality gained 7,900 jobs.
  • Mining, Logging, and Construction gained 4,200 jobs.
  • Transportation & Utilities gained 3,500 jobs.
  • Professional/Technical Services gained 3,200 jobs.

Industries that saw a decline during the past 12-month period:

  • Financial Services down 2,100 jobs.
  • Federal Government down 1,500 jobs.
  • Local Government down 1,300 jobs.
  • Manufacturing down 500 jobs.

Although Kansas City’s losses induced by the pandemic were less than many of our peers, the metro has been slower to recover. Due to current economic headwinds like inflation, the increase in interest rates by the Federal Open Market Committee (FOMC), continuing supply chain issues, and the issues caused by the Russian invasion of Ukraine, slower growth will likely continue. These factors raise the probability of a recession, though it is still possible the FOMC will be able to cool off the economy without causing one. The decline in job postings may be the first real local indicator that the red-hot labor market is now entering a cooler phase. Whether this turns into a significant downturn and, if so, for how long, depends largely on how long the FOMC believes it needs to aggressively raise interest rates in order to re-establish something resembling price stability.

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